Sales Static Budget Actual Results (1,000 recliners) (980 recliners) (1,000 recliners X $505 each) (980 recliners X $480 each) $ 505,000 $470,400 Variable Manufacturing Costs: Direct Materials (6,000 yds. @ $8.60/yd.) 51,600 (6,143 yds. @ $8.40/yd.) 51,601 Direct Labor (10,000 DLHr @ $9.20/DLHr) 92,000 (9,600 DLHr @ $9.30/DLHr) 89,280 Variable Overhead (6,000 yds. @ $5.20/yd.) 31,200 (6,143 yds. @ $6.60/yd.) 40,544 Fixed Manufacturing Costs: Fixed Overhead Total Cost of Goods Sold Gross Profit 60,600 62,600 235,400 244,025 $ 269,600 $226,375 Requirements 1. Prepare a flexible budget based on the actual number of recliners sold. 2. Compute the cost variance and the efficiency variance for direct materials and for direct labor. For manufacturing overhead, compute the variable overhead cost, variable overhead efficiency, fixed overhead cost, and fixed overhead volume variances. Round to the nearest dollar. 3. Have Morton's managers done a good job or a poor job controlling materials, labor, and overhead costs? Why? 4. Describe how Morton's managers can benefit from the standard cost system.